American Can Company

Plain-English summary

The Secretary sought entry into an American Can plant for discovery, and the company argued that only federal employees should be allowed because an outside expert could learn trade secrets or proprietary information. The judge allowed nonfederal personnel to enter under a protective order. Applying Owens-Illinois, the Commission held that trade-secret concerns do not bar an outside expert when enforceable protective measures adequately safeguard the information. It remanded the case for the judge to apply that decision's procedures and minimum protective-order requirements. Commissioner Barnako partly dissented because he would require good cause for using a nonfederal expert after trade secrets were proven.

Decision snapshot

• Cited standard(s): The decision does not identify the OSHA standard underlying the enforcement case.
• Outcome: The discovery dispute was remanded for proceedings and a protective order consistent with Owens-Illinois.
• Key point: An employer's trade secrets can be protected through an appropriate order and enforceable contract rights without automatically limiting discovery to federal experts.

Full text (OSHRC public release)

Docket No. 76-3939

AMERICAN CAN COMPANY

OSHRC Docket No. 76-3939

Occupational Safety and Health Review Commission

February 28, 1979

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Before CLEARY, Chairman; BARNAKO and COTTINE, Commissioners.
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COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Marshall H. Harris, Reg. Sol., USDOL

Michael Robilotto, American Can Company, for the employer

OPINIONBY: CLEARY

OPINION:

DECISION

CLEARY, Chairman:

This case is before the Commission on American Can's interlocutory appeal of Judge Henry F. McQuade's ruling granting the Secretary's motion to obtain entry into American Can's plant for purposes of discovery. Citing Reynolds Metals Co., 78 OSAHRC 51/F1, 3 BNA OSHC 1749, 1975-76 CCH OSHD P20,214 (No. 4385, 1975), American Can argued before the judge that such a discovery entry would endanger the confidentiality of its trade secrets or other proprietary information and therefore should be conducted only by federal employees, who would be subject to 18 U.S.C. �
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1905. The judge, however, refused to restrict the Secretary's discovery in this manner.
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Rather, he noted American Can's claim of proprietary matters, and he directed that the entry be pursuant to a protective order. Although the parties have submitted drafts of protective orders, American Can appeals from that portion of the judge's order allowing entry by persons who are not [*2]
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federal employees.

Specifically, American Can contends that affidavits it submitted to the judge are sufficient to demonstrate the existence of trade secrets, or other matters in which it has a proprietary interest, that would be disclosed by the discovery entry.
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Therefore, says American Can, the Secretary is required by our decision in Reynolds Metals, supra, to show the need to use non-federal experts to conduct the discovery entry.

We have examined the facts of the case and find that the issues presented here are governed by the recently-issued Commission decision in Owens-Illinois, Inc., 78 OSAHRC 105/C8, 6 BNA OSHC 2162, 1978-79 CCH OSHD P23,218 (No. 77-648, 1978) ("Owens"). In that case we held that the possibility of disclosure of trade secrets to an expert who is not a federal employee does not preclude the granting of a motion for entry upon respondent's land for discovery purposes so long as the respondent's trade secrets are adequately protected. We concluded in Owens that trade secrets could be adequately protected by appropriate protective orders and a provision in the Secretary's contract with the outside expert that would allow the employer an [*3]
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enforceable third-party beneficiary interest.
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Owens described the manner in which a trade secrets claim should be raised by an employer.
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It also set forth the procedure to be followed when an employer's trade secrets claim is disputed by the Secretary, as well as the minimum requirements of an acceptable protective order. To the extent that Reynolds Metals is inconsistent with Owens it has been overruled.

Accordingly, this case is remanded to the judge for further proceedings consistent with the Commission decision in Owens. So ORDERED.
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CONCURBY: BARNAKO (In Part)

DISSENTBY: BARNAKO (In Part)

DISSENT:

BARNAKO, Commissioner, Concurring in part and Dissenting in part:

I dissent from the majority's order insofar as the majority concludes that the Secretary may use a non-Federal expert to conduct the requested discovery regardless of good cause and adhere to the views I expressed in Owens-Illinois, Inc., 78 OSAHRC 105/C8, 6 BNA 2162, 1978-79 CCH OSHD P23,218 (No. 77-648, 1978), adopting my position in Reynolds Metals Co., 78 OSAHRC 51/F1, 3 BNA OSHC 1749, 1975-76, CCH OSHD P20,214 (No. 4385, 1975) and the Commission's subsequent decision in the same case.
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78 OSAHRC 41/D4, 6 BNA OSHC 1667,
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1978 CCH OSHD P22,806 (1978). If American Can proves the existence of trade secrets that would be endangered by a discovery inspection, then the Secretary must show good cause why it is necessary to use a non-Federal expert.
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If the Secretary fails in this respect, I would limit him to the use of a Federal expert to conduct the requested discovery. If the Secretary were to show good cause for the use of non-Federal experts, I would agree to entry of a protective order meeting the requirements set forth in Owens. n1

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n1 Both parties have submitted affidavits on the question of trade secrets and good cause. American Can submitted affidavits from engineering and sales personnel to the effect that there are trade secrets or other matters of a proprietary nature.
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The Secretary, on the other hand, presented an affidavit by its outside expert stating that during visits he had made to American Can plants other than the one involved in this proceeding American Can did not claim any trade secrets or other proprietary matters, nor did American Can request that he enter into any agreement regarding confidentiality. Respondent in turn disputes this affidavit with another affidavit wherein its vice-president asserts that its prior presentation to the Secretary's expert was carefully structured not to reveal confidential matters.

With respect to the question of good cause to use a non-Federal expert, the Secretary resubmitted the same affidavit he had filed in Reynolds II detailing his extensive but unsuccessful search of Federal agencies for experts qualified in noise control.
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An affidavit by American Can's attorney, though, states he had attended a hearing in a Commission proceeding where a witness for another employer testified that he had been able to contact six government employees qualified in the control of industrial noise whom he identified by name.

Although Judge McQuade alluded to American Can's claim of trade secrets and to the Secretary's affidavits regarding the lack of qualified Federal employees, it does not appear from the record that he resolved the conflicting affidavits.
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Nor did he make findings as to the nature of the trade secrets, their likelihood of disclosure, and whether good cause was shown for the use of a non-Federal expert.
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Because the proceedings below arose prior to the Commission decision in Owens, wherein the Commission for the first time set forth the procedure to be followed in determining the existence of trade secrets, I would afford the parties a further opportunity to state their positions with regard to the existence of trade secrets likely to be disclosed by a discovery entry.
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The judge should then weigh the parties' conflicting affidavits and make specific findings as to whether or not there are trade secrets likely to be disclosed by the discovery entry.
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In the event the judge concludes that the issue of trade secrets cannot be decided from the affidavits alone, then he should convene an evidentiary hearing on that issue.
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If the judge finds trade secrets likely to be disclosed, then in similar fashion he should decide whether good cause was shown for the use of a non-Federal expert.

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